Despite having more data than ever before, many brands have no idea who their customers really are beyond demographics. In meetings with company representatives, we regularly encounter statements like: "We don't know who our customers are" or "Everyone is our customer." These claims are symptoms of a deeper problem – the company lacks a clear understanding of whom it serves and what customer experience it creates. The result is bland and generic customer experiences that generate no emotional response. Customers then don't care where they shop next time. Segmentation helps organizations create competitive advantage.
If an organization doesn't know who its customers are and what they need, tomorrow another player may come along and take a slice of its market share, or the organization will no longer be able to grow.
Why demographics are no longer enough
Business strategies have for many years relied on demographic data – age, income, gender, and location. While demographics remain an important part of the puzzle, today it's no longer enough.
This approach worked in a predictable world where people's life paths followed clearly defined patterns: education, employment, marriage, home and family, and finally retirement. Individual identity was firmly anchored in collective structures, and people lived within narrow, local, and socioeconomic layers with limited choices.
However, technological progress, cultural changes, and their acceleration during the pandemic have fundamentally transformed society. Values and life choices have dramatically diversified and are no longer necessarily tied to common demographic characteristics. Modern consumers postpone or completely skip traditional life milestones such as marriage, starting a family, or buying their own home. Over their lifetime, they may change careers multiple times, taking advantage of countless education and retraining opportunities.
Two 35-year-old customers can thus represent completely different segments. They may differ in financial behavior, family structures, income sources, saving and spending habits, values, or technological literacy. While one may be a digital nomad investing in cryptocurrencies, the other may be a traditional family man with stable income and a conservative approach to finances.
From the question "Who Are They" to "How Do They Think"
Beyond demographic segmentation, we therefore focus on customer attitudes – what interests people, what they value, what they fear, and what they aspire to. The same product, for example a Patagonia jacket, can be purchased by demographically similar customers for completely different reasons: the first for material properties, the second for style, the third for sustainability – their attitudes differ. Therefore customers of today expect relevance, personalization, and empathy.
Traditional metrics have their limits: Net Promoter Score tells us whether a customer is satisfied, but doesn't tell us why. Quantitative research shows us the quantity of specific customer interactions but doesn't reveal their motivations. Data on customer behavior on the web doesn't capture their emotions.
"Data will show you what happened. The customer will tell you why."
In the depths of customer mind
The foundation is recognizing that our internal settings determine the way we approach various life challenges and how we make decisions. These deep patterns of thinking shape our behavior, choices, and reactions to stress or failure. When a brand can identify them, it can build its competitive advantage on them. According to Harvard Business Review, customers who feel understood have triple the value for the brand.
When analyzing the grocery delivery market, for example, we might focus on women responsible for grocery shopping for households with four or more members.
Qualitative research examines the thought processes and needs of female customers – for example, the importance of a precise delivery time window or attitudes toward features such as recurring shopping lists. Research also identifies critical decision-making moments and factors that influence the choice of a particular retailer. Based on these insights, a set of attitudes is then defined that form the basis for formulating a unique value proposition and competitive advantage.
We can then respond to these attitudes with interventions in service design. In this case, for example:
- How could we enable budget-oriented customers to effectively compare products? How
- could we provide time-constrained customers with convenient repeat purchases?
Where to start with getting to know your customer?
The problem with traditional demographic segmentation is that it only answers the question of "who" the customer is on paper, but doesn't reveal "why" they buy. It doesn't explain the motivations, values, or real needs that lead to purchasing decisions. In an era when every consumer is a unique combination of experiences, values, and aspirations, we need more sophisticated approaches to segmentation that go beyond demographic data.
If you decide to reach out to customers to discover their attitudes, we recommend focusing on these parameters:
Customer Intentions – Find out what the customer is trying to achieve with their purchase, what problems they're solving, and what needs they want to satisfy.
Pain Points – What frustrates the customer, what do they fear, and what holds them back?
Benefits/Expectations – What does quality service mean to the customer and how do they define a good experience?
We also addressed customer expectations and pain points in the article about brick-and-mortar stores: The Future of Brick-and-Mortar: 4 strategies for success in the digital age
At Lighting Beetle*, when discovering customer attitudes, we collect quantitative and qualitative data based on which we help organizations create a unique value proposition that resonates with target customers. We also help organizations design interventions in customer services to strengthen their market position.
Customer motivations and priorities are key
Demographic segmentation belonged to a world of predictable life paths and collective identities. In today's era of diversified values and non-linear careers, it's no longer enough to know how old a customer is or where they live. The key is to understand how they think, what motivates them, and what their priorities are.
Supplementing demographic segmentation with customer attitudes or creating segmentation based on attitudes is a necessity for brands that want to grow in the future. However, this requires moving from a superficial "who?" to a deep "why?".
If you're looking for opportunities to better understand your customer, translate that into concrete action steps and growth, I'll be happy if you contact me.
